Bias of Arbitration Service Exposed

By Martin & Jones on September 11, 2009

The National Arbitration Forum (“NAF”), the largest arbitration company in the nation, recently announced that it would discontinue conducting consumer arbitrations. The move comes as a result of a lawsuit filed against NAF by the Minnesota Attorney General.

That suit and others followed accusations that NAF, though holding itself out as an independent and neutral decisional body, was actually working against the interest of consumers by hiding its extensive ties to the debt collection industry. Despite NAF’s representations to the public that it was an independent and neutral arbitration company, NAF actively concealed the fact that a New York hedge fund essentially owned and managed both NAF and the three largest debt collection law firms which frequently presented disputes to the NAF for decision.

In its settlement with the Minnesota Attorney General, NAF agreed to get out of the business of arbitrating consumer claims. The move is an important one for consumers and puts an end to a years-long practice of consumers having their claims decided by a biased decision maker.